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The Fed left its key lending rate unchanged but said it expects inflation to move "up this year and to stabilize" around its 2 percent target.

The S&P 500 ended little changed and the Nasdaq finished 0.12 percent higher after the central bank's statement was released. The Dow closed 72 points higher after giving up an earlier gain of more than 250 points. However, the 30-stock index capped its best month since March 2016.

U.S. Treasury yields rose on the back of the statement. The benchmark 10-year yield rose to 2.75 percent, while the two-year yield traded at 2.15 percent.

Earlier, the Dow, S&P 500 and Nasdaq were trading sharply higher, rebounding from a sharp two-day sell-off. Stronger-than-expected earnings helped lift stocks. The major indexes fell sharply in the previous two sessions, with the Dow falling more than 500 points in that time period.

Rising yields have also put stocks under pressure, elevating concerns over whether higher interest rates could snuff out the bull market.

"There was quite a bit of damage done on a short-term basis with equity indices and many sectors snapping one-month trendlines on heavy negative breadth and higher volume," Mark Newton, a managing member at Newton Advisors, said in a note to clients. "It's tough to think markets simply recover right away and this proved to be two days only."

Of the S&P 500 companies that had reported as of Tuesday morning, 80 percent have posted better-than-expected earnings, while 81 percent have beaten top-line estimates, according to Thomson Reuters I/B/E/S.

"Despite the potential negative impact of write-offs related to the [tax bill], Q4-2017 should mark the sixth straight quarter of positive year-over-year earnings growth and the seventh quarter of positive revenue growth," said Ed Yardeni, the president and chief investment strategist at Yardeni Research.

In economic news, ADP and Moody's Analytics Wednesday said private companies added 234,000 jobs in January. Economists polled by Reuters expected a gain of 185,000. The report serves as a preview to the U.S. government's monthly jobs report, which is scheduled for release Friday at 8:30 a.m. ET.

Other data released Wednesday included the Chicago purchasing manager's index (PMI), which fell slightly in January, and pending home sales, which rose 0.5 percent in December.

On the political front, traders assessed President Donald Trump's State of the Union address. The overall theme was "a safe, strong and proud America," with Trump touching upon topics such as immigration, bipartisan cooperation, infrastructure and the economy.

"The biggest reaction was towards the end, when it became clear there weren't going to be any surprises," said Chuck Self, a chief investment officer of iSectors.

He noted stock futures started to climb around that time Tuesday night.